Affordable, mid-cost housing to keep property market afloat

By MARK RAO

The property market in Malaysia is expected to be sustained by the affordable housing segment over the next three years, with the country’s economy on gradual recovery since early this year.

LBS Bina Group Bhd MD Tan Sri Lim Hock San said the affordable home market, including medium-cost properties, will remain active until 2020, with the economy showing positive signs of a recovery.

“The property market is related to the economy — if the economy is bad, the property sector will also be affected,” Lim told members of the press in Petaling Jaya yesterday. “For the first-quarter of this year (1Q17), Malaysia’s gross domestic product (GDP) stood at 5.6% — this is an indicator that the economy is definitely picking up.”

Lim added that positive momentum in the country’s share market, coupled with the One Belt, One Road trade initiative with China as its largest trading partner, will aid in boosting the market domestically.

Malaysia’s GDP grew at its fastest pace in two years for 1Q17, surpassing the 4.6% growth forecast for the period, while the FTSE Bursa Malaysia KLCI — a composite index of the top 30 listed companies in the country — has been rallying over the past 12 months.

“If GDP remains between 4% and 6% per annum going forward, the property market can sustain. In the meantime, buyers will be looking at low-to medium-cost housing, as sentiment is still there but cautious.”

According to Bank Negara Malaysia’s latest annual report, there was a shortage up to 960,000 units of affordable housing in 2014, with Sabah and Sarawak accounting for half of the supply-demand gap.

Lim was speaking after the company’s EGM yesterday, where 100% shareholders’ approval had been obtained for a renounceable rights issue of up to 150.6 million new redeemable convertible preference shares (RCPS).

The new shares were fixed at RM1.10 per RCPS, on the basis of one RCPS for every five existing ordinary shares in LBS Bina, with substantial shareholders in the company — Gaterich Sdn Bhd, Lim and LBS Bina ED Datuk Wira Lim Hock Guan — to undertake their full allotment to meet the minimum subscription level.

The exercise aims to raise up to RM165.66 million in proceeds to fund the company’s six property projects in the pipeline, all of which fall under the affordable to medium-cost property category.